Understand the Differences in Characteristics Between Debit Cards and Credit Cards. Which is your choice?

Are you still confused in choosing a credit or debit card? Do you even consider having both? Actually both have a similar function, which facilitates transactions without the need to use money physically. But apparently both of them have very different characteristics. Then which is more suitable for you? Let’s look at the differences in characteristics between credit cards and debit cards so you are no longer confused in choosing.

 

Non Cash Transaction Tool: vs. Credit Card Debit Card

Non Cash Transaction Tool: vs. Credit Card Debit Card

You may have used non-cash transaction services offered by credit and debit cards for a long time. Many benefits of credit cards and debit cards certainly make transactions safer, easier and more practical. However, do you know that they have different characteristics? In general, the working mechanism of debit and credit cards are as follows:

  • Debit card: withdraw money directly from your savings when the transaction is done, whereas
  • Credit card: collect your total transaction and collect it at the end of the month.

From how to use it, the difference is clearly seen. However, there are still many other differences, for example in terms of work mechanisms, manufacturing processes, benefits, to the level of security.

Therefore, don’t just use it! Lupin Simmons will invite you to see and understand the different characteristics of credit cards and credit cards so you can maximize profits and use.

 

Difference in Working Mechanism

Many customers only use debit or credit cards to avoid thick wallets due to cash. But actually, the debit and credit card mechanism is different, you know ! In order for you to be able to use it according to its capacity, let’s recognize some of the working mechanisms of the two non-cash transaction tools:

Debit Card Credit card
Can be used only if you have a balance. Maximum transaction limit according to the balance held Can be used without a balance. The maximum transaction limit is determined by the card limit specified by the bank
No annual fees are charged (transaction fees are deducted directly from the debit card owner’s customer balance) Charged annual fees, stamp fees and other fees on monthly bills (fees vary according to card type and issuing bank)
Can be used for cash withdrawals (free of charge) Can be used for cash withdrawals (subject to quite high fees)
Use in online transactions is limited Use in a wider online transaction (using the last 3 numbers on the card)
Transactions can be done with a PIN
  • Non-cash transactions can be done by PIN or signature
  • Cash withdrawal transactions can be done with a PIN
Not a loan product, there are no penalties in the form of interest or additional fees .

Is a product of short-term loans with bills every month, payment methods:

  • Pay in full
  • Pay minimum and installments with interest

 

Difference in Submission Process

credit loan

To apply for debit and credit cards, there are different conditions for each bank. But in general the submission will go through the following process:

Debit Card Credit card
Published by banks for customers who already have an account Published by the bank without the need to have a related bank account
Can be obtained even if you do not visit the bank directly, such as online submissions and marketing agents
Additional cards can be submitted for children or relatives of the main card owner who does not meet the credit card application requirements (full responsibility for the main card owner)

 

Benefits Differences Offered

Well, to determine which card is suitable for your needs, you also need to compare the benefits or benefits offered by both. Let’s see what are the advantages of debit and credit cards:

Debit Card Credit card
Savings are movable, can be withdrawn in cash and transferred by transfer to another account Allows you to shop early and payment follows later
Can be used for transactions in various places such as supermarkets , retail, and others
  • Can be used for transactions in various places such as supermarkets , retail, and others
  • Have offers in the form of discounts, 0% installments, or reward points, and other promos
The maximum limit of a larger transaction depends on the account balance Easy to use abroad and is valid in almost all parts of the world
There is no potential for debt Not subject to interest if paying on time
Facilitate financial arrangements due to transaction history

 

Security Level Difference

Benefits Differences Offered

In terms of security, many say that credit cards are safer than debit cards. But is that really true? Let’s prove it:

Debit Card Credit card
No potential to cause debt Potential for causing debt if conducting transactions outside of financial means
Transactions are not protected by law Transactions are protected by law
Security tends to be low: misuse of cards can result in drained money if the PIN number is known Safer: misuse of the card can be claimed and the balance will not be reduced as long as the transaction is proven invalid

 

Difference in weakness

After satisfied discussing the benefits, it is certainly incomplete if it does not compare its weaknesses. Some of the disadvantages of debit cards and credit cards include the following:

Debit Card Credit card
Cannot be used in excess of the balance in the account Can be used only to the extent of a credit card limit (if the limit is small, then also small funds can be used)
It cannot be used for large funding needs in a short time if the balance is insufficient
  • There is interest in each transaction
  • Interest is imposed on certain retailers
Minimal promos and offers from supermarkets or retail. There are rules for payment, such as deadlines and late fines
High interest if used for cash withdrawals

 

So, Which Are Your Choices: Debit vs. Cards Credit card

So, Which Are Your Choices: Debit vs. Cards Credit card

Based on the difference tables above, conclusions can be drawn as follows:

  1. Debit cards are suitable for users who have sufficient funds, debit cards are suitable for users who need a short-term loan.
  2. Debit cards are easier to use if you need cash.
  3. Credit cards are easier to use in transactions online and abroad.
  4. Credit cards offer more promos to supermarkets and retail.
  5. More fees appear on credit cards (interest, late fees, annual fees, etc.)
  6. Submission of credit cards tends to be easier.
  7. Credit cards are safer than debit cards.

How? Have you made a choice? Or maybe you need both? It doesn’t matter as long as you know the difference, including the benefits and disadvantages. The important thing is that you are always wise in using both, because the main purpose of debit cards and credit cards is to facilitate transactions with non-cash transactions. Do not let this goal even be misused and lead to harm to you.

Do you have questions about the different characteristics of debit cards and other credit cards? Leave your comment below . If you have questions, please submit your question in the column below. Our Financial Planner is ready to help you, thank you.